On Monday, EUR/USD continued its decline after rebounding from the 127.2% retracement level at 1.1700, moving toward the 100.0% retracement level at 1.1620. A rebound from 1.1620 would favor the euro and a resumption of the advance toward 1.1700. Consolidation below 1.1620 would allow traders to expect a further decline toward the next Fibonacci level of 76.4% at 1.1551.

The wave situation on the hourly chart remains "bullish." The latest completed downward wave did not break the previous low, while the latest upward wave broke the previous high. Geopolitical developments remain consistently negative: negotiations between Iran and the United States are not taking place, and the blockade of the Strait of Hormuz remains in place. However, the FOMC's stance, which remains highly contradictory, is currently more important for the dollar.

There was no fundamental news backdrop on Monday. There were no reports or events during the day. However, this did not particularly upset traders. The bulls paused their attacks, while the bears took advantage of the pause and gradually pushed the exchange rate lower. The bears have little in the way of prospects at the moment. They may emerge tomorrow if U.S. economic data comes in stronger than it has over the past couple of months. In particular, traders will focus on the GDP report and the PCE price index. The former will show how much the U.S. economy slowed in the second quarter according to the second estimate, while the latter will show how much prices for core personal consumption expenditures increased in July. Personally, I do not consider the PCE index important, and it also tends to lag behind headline and core inflation. The market has already seen the July inflation data, so the PCE index is unlikely to change traders' overall conclusions. Inflation in the United States is slowing, but it is doing so within the range of an acceptable pullback caused by the pause in the conflict between the United States and Iran in June and July. The conflict resumed in August, oil prices increased, so an increase in headline inflation for this month should also be expected.

On the 4-hour chart, the pair consolidated above the 61.8% retracement level at 1.1649. Thus, the euro's advance may continue toward the next Fibonacci level of 76.4% at 1.1726. The upward trend channel indicates a full-fledged "bullish" advance. The U.S. dollar can be expected to strengthen only after the price closes below the channel. No emerging divergences are observed today, but the RSI indicator has entered overbought territory (above 80), which suggests that a corrective pullback may occur.

Commitments of Traders (COT) Report:

During the latest reporting week, professional traders closed 945 Long positions and 1,876 Short positions. Over seven weeks in February and March, the bulls' overwhelming advantage disappeared because of the war in Iran, while over the past twenty-one weeks the situation has become more balanced amid the supposed ceasefire and market hopes for an end to the war. The total number of Long positions held by speculators currently stands at 196,000, while the number of Short positions stands at 255,000. The bears are once again taking the lead.

Overall, over the long term, major market participants continue to show considerably greater interest in the euro. Undoubtedly, events of various kinds around the world, of which there has been no shortage in recent years, affect investor sentiment. In particular, the market is currently keeping a close eye on the situation in the Middle East, where the war seems to end and then resume again. The market initially ignored the ceasefire and then ignored the resumption of the war. Thus, geopolitics no longer determines the dollar's fate on its own.

News Calendar for the United States and the European Union:

• Germany – Final second-quarter GDP reading (06:00 UTC).
• Germany – Ifo Business Climate Index (08:00 UTC).
• U.S. – Weekly ADP employment report (12:15 UTC).
• U.S. – CP Consumer Confidence Index (14:00 UTC).
• U.S. – New Home Sales (14:00 UTC).

On August 25, the economic calendar contains five entries, none of which I would consider important. The impact of the economic backdrop on market sentiment on Tuesday will be extremely weak or nonexistent.

EUR/USD Forecast and Trading Tips:

Buying the pair is possible if it consolidates above 1.1700 on the hourly chart or rebounds from 1.1620. Sell trades were possible following a rebound from 1.1700 on the hourly chart, with a target of 1.1620. These trades can remain open today.

The Fibonacci level grids are drawn from 1.1620–1.1325 on the hourly chart and from 1.1849–1.1325 on the 4-hour chart.